Credits rating company AM Best has revised its outlook to stable from negative for the Long-Term Issuer Credit Ratings of Swiss Re and its rated operating affiliates, and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa” (Superior).
The ratings reflect Swiss Re’s consolidated balance sheet strength which AM Best assessed as the strongest, as well as its strong operating performance, favourable business profile and very strong enterprise risk management. It also reflects the sustained improvements in Swiss Re’s underwriting results.
The group has taken actions in recent years to restore its technical performance including pruning its Corporate Solutions book, a revised appetite for general liability classes in the US and a significant reduction in capacity for frequency and aggregate natural catastrophe business, says the ratings agency.
Hardening reinsurance market conditions helped improve Swiss Re’s performance in non-life segments. Additionally, the normalised performance of the group’s life portfolio, excluding the impact of COVID-19, remained robust and reported a profit in 2022 and H1 2023.
Overall, the group reported a strong net income of $1.4 billion in H1 2023 compared year over year of $157 million, reflecting underwriting action taken in recent years. In this period, the group reported combined ratios of 94.7% and 91.0% for its non-life divisions, P&C Reinsurance and Corporate Solutions, respectively.
AM Best notes that Swiss Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation that is comfortably in excess of AM Best’s minimum requirement for the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR).
The ratings agency also considers the group’s conservative asset allocation, strong asset liability management capabilities and low dependence on retrocession. In addition, Swiss Re’s financial flexibility is excellent, supported by effective capital management, says AM Best.